Retail sales up 0.6% in August from July even as tariffs hurt jobs and
lead to price hikes
[September 17, 2025] By
ANNE D'INNOCENZIO
NEW YORK (AP) — Shoppers increased their spending at a
better-than-expected pace in August from July, helped by back-to-school
shopping, even as President Donald Trump’s tariffs start to hurt the job
market and lead to price increases.
Retail sales rose 0.6% last month from July, when sales were up a
revised 0.6%, according to the Commerce Department’s report. In June,
retail sales rose 0.9%, the government agency said.
The August performance, announced Tuesday, was also likely helped by the
continued efforts by Americans to keep pushing up purchases ahead of
expected price increases.
The sales increases followed two straight months of spending declines in
April and May.
Excluding auto sales, which have been volatile since Trump imposed
tariffs on many foreign-made cars, retail sales rose 0.7% in August.
Sales at auto vehicle and parts dealers rose 0.5%.
The data showed solid spending across various other outlets. Business at
electronics and appliance stores was up 0.3%, while online retailers saw
a 2% increase. Business at clothing and accessories retailers rose 1%.
And business at restaurants, the lone services component within the
Census Bureau report and a barometer of discretionary spending, rose
0.7%. Business at furniture and home furnishings stores was down 0.3%.
A category of sales that excludes volatile sectors such as gas, cars,
and restaurants rose last month by 0.7% from the previous month. The
figure feeds into the Bureau of Economic Analysis’s consumption estimate
and is a sign that consumers are still spending on some discretionary
items.
“This is further evidence that we shouldn’t underestimate the strength
of the consumer,” Bankrate senior industry analyst Ted Rossman wrote in
a note Tuesday. “Back-to-school shopping was a key theme in August, as
evidenced by the strong clothing and electronics sales.”
Government retail data isn’t adjusted for inflation, which rose 0.4%
from July to August, according to the latest government report. That was
faster than the 0.2% pace the previous month. So that could have
inflated the sales figures as well.
Consumer prices increased 2.9% in August from a year earlier, the Labor
Department said last week, up from 2.7% the previous month and the
biggest jump since January. Excluding the volatile food and energy
categories, core prices rose 3.1%, the same as in July. Both figures are
above the Federal Reserve’s 2% target.
Stronger-than-expected retail sales, coupled with higher inflation as
well as data showing soaring applications for unemployment aid, all
create a complicated picture of the economy. Such data put the Federal
Reserve in an increasingly tough spot as it prepares to cut rates at its
meeting this week, economists said.
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 Earlier this month, the Labor
Department reported that U.S. employers — companies, government
agencies and nonprofits — added 22,000 jobs last month, down from
79,000 in July and well below the 80,000 that economists had
expected.
Carl B. Weinberg, chief economist at High Frequency Economics, noted
the retail sales increase “will not be enough of a surprise to stop
the Fed from cutting rates this week, but it should support a
hawkish message from the Fed Chair that a knock-on rate cut is not
assured.”
Major retailers including Walmart, Macy’s and Best Buy recently
reported their quarterly results, underscoring that shoppers are
still buying, but are choosy. Some have raised prices ,but many have
described the hikes as modest.
Still, so far, shoppers haven’t felt the big sting as some
economists predicted earlier in the year as many retailers ordered
goods ahead of tariffs and absorbed a big chunk of the costs as they
came in, worried about passing on any hefty price increases.
The price gains have also been gradual enough to mute changes in
consumer behavior, Walmart CEO Doug McMillon told analysts last
month.
But Walmart and others said they expect to see costs increase as
they replenish inventory at post-tariff levels.
Jewelry maker Pandora hasn’t announced specific price increases, but
Pandora CEO Alexander Lacik said in a call with analysts last month
that the company is monitoring the scenario.
He noted that “the U.S. consumer will eventually have to bear the
brunt of these tariffs,” but added, “it’s not just on jewelry, it’s
on many product categories. So the big question mark is, what
happens with inflation in the U.S., unemployment rates, all sorts of
other macro drivers, and I think this is ahead of us.”
Matt Priest, president and CEO of trade group Footwear Distributors
and Retailers of America, told reporters Monday that members are
starting to pass along price increases to shoppers. Its members had
previously paid a total of $3 billion in tariffs annually for years;
that number is now on track to hit $5 billion by year-end. He warned
that women’s shoes will be affected first.
“Women's shoes are more fashion-oriented,” Priest said. “Our ability
to front-load women's product based on fashion trends was limited,
and so we are seeing that those increases start to hit consumers
first.”
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